Q.What do you understand by normative economic analysis?
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Start your 14-day free trial to unlock the full solution →Normative economic analysis is the branch of economics that makes value judgments about what the economy ought to be like, prescribing desirable outcomes rather than describing what is.
Normative economic analysis deals with "what should be" — it is prescriptive, not descriptive. While positive economics asks "What is the current rate of inflation?" (a factual, testable question), normative economics asks "What should the inflation rate be?" or "Is the current level of income inequality fair?" These questions cannot be settled by data alone because they involve ethical values, political priorities, and subjective opinions about fairness, justice, or welfare.
For example, consider the statement: "The government should provide free primary education to all children." This is a normative statement. It cannot be proven true or false by looking at statistics — it rests on a value judgment that education is a fundamental right and that the state has a duty to ensure it. Another person might argue that parents should bear the cost, and that too is a normative position. Both are valid as opinions, but neither is "correct" in the scientific sense.
A common mistake is to confuse normative analysis with positive analysis. If a statement uses words like "should," "ought," "better," "fair," or "desirable," it is almost certainly normative. Positive statements use "is," "was," "will be," or "causes." …
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